Equity Dividend Rate [4047]

A property was purchased for $1,000,000 with a down payment of $200,000.  The loan was for 15 years at 8% interest.  If the EGI was $300,000 and the operating expenses were $120,000 in the first year,  what is the equity dividend rate?

Equity Dividend = NOI – annual debt service

Equity Dividend Rate = Equity Dividend / Equity Investment

Equity dividend = $180,000 – $93,464 = $86,536

Equity dividend rate = $86,536 / $200,000 = 0.433 (43.3%)